Warner Bros Discovery Inc

Appendix D

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), this proxy statement also contains non-GAAP financial measures, such as Adjusted EBITDA, Free Cash Flow (FCF) and Net leverage, identified with an "(*)".

Management uses certain non-GAAP financial measures, such as Adjusted EBITDA, Free Cash Flow (FCF) and Net leverage, among other measures, in making financial, operating and planning decisions and in evaluating our performance. Please see the 2024 Form 10-K for a reporting of our financial results in accordance with GAAP.

Adjusted EBITDA: The Company defines Adjusted EBITDA as operating income excluding: (i) employee share-based compensation, (ii) depreciation and amortization, (iii) restructuring and facility consolidation, (iv) certain impairment charges, (v) gains and losses on business and asset dispositions, (vi) third-party transaction and integration costs, (vii) amortization of purchase accounting fair value step-up for content, (viii) amortization of capitalized interest for content, and (ix) other items impacting comparability. The Company believes Adjusted EBITDA is relevant to investors because it allows them to analyze the operating performance of the Company using the same metric management does. Adjusted EBITDA should be considered in addition to, but not a substitute for, operating income, net income and other measures of financial performance reported in accordance with GAAP.

The following information is provided to reconcile Adjusted EBITDA to Net loss available to Warner Bros. Discovery, Inc., its most comparable GAAP measure, for the years ended December 31, 2024 and December 31, 2023.

Free Cash Flow (FCF): The Company defines free cash flow as cash flow from operations less acquisitions of property and equipment. The Company believes free cash flow is an important indicator for management and investors of the Company's liquidity, including its ability to reduce debt, make strategic investments, and return capital to stockholders.

The following information is provided to reconcile Free Cash Flow (FCF) to Cash provided by operating activities, its most comparable GAAP measure, for the year ended December 31, 2024.

Net leverage: The Company defines net leverage as the calculation where net debt (gross debt of $40.0 billion, less cash, cash equivalents, and restricted cash of $5.4 billion) is divided by the sum of the most recent four quarters Adjusted EBITDA of $9,032 million. The Company believes this measure is relevant to investors as it is a financial measure frequently used in evaluating a company's financial condition.

The following information is provided to reconcile Net leverage ratio to Gross Debt, its most comparable GAAP measure, for the year ended December 31, 2024.

144